Cement Australia breaks competition law

Cement Australia
, the country’s largest local cement producer, broke competition law by colluding with a supplier in south-east Queensland to keep competitors out of the market for fly ash, a byproduct of burning black coal at power stations, which is used in cement production.

The Federal Court in Brisbane ruled on Tuesday that Cement Australia, jointly owned by Swiss company Holcim and Germany’s HeidelbergCement, sought to stop competitors including Newman’s Concrete from accessing the cement market, by preventing them from getting cheap access to fly ash.

The concentrated nature of the construction industry makes it more prone to contraventions of competition law than others, said Australian Competition and Consumer Commission chairman Rod Sims. He welcomed the judgment, which he said gave companies a clear guide as to which types of behaviour are deemed exclusionary and which are not.

“It clarifies where the line is between what is done for the purpose of substantially lessening competition and what behaviour does not have that purpose," Mr Sims told The Australian Financial Review. “It’s very significant."

Cement Australia chief executive Rob Davies declined to comment.

Between 2002 and 2006, Cement Australia reached exclusive contracts with the operators of the Millmerran, Tarong, Tarong North and Swanbank power stations to buy up all their fly ash. No allegations of wrongdoing were made against the power stations, but fly ash supplier
Pozzolanic Enterprises
, also found by the court to have contravened the law, had the contracts to buy the fly ash from the power stations. Cement Australia has since acquired Pozzolanic.

In his judgment, Justice
Andrew Greenwood
said that Pozzolanic and Cement Australia enjoyed such a substantial market share and exercised such a degree of influence on pricing in the local concrete-grade fly ash market that the impact of a new entry by a competitor would have been significant.

One outcome was that some independent concrete businesses had started buying fly ash directly from Millmerran, Mr Sims said.